Brokers erring on the side of caution at tax time

Brokers erring on the side of caution at tax time

Has Canada Revenue put the fear of God into brokers? Well, at least the fear of an audit, if the latest MortgageBrokerNews poll is any indication.

Almost two-thirds of brokers who responded to the online poll this week said they handed their taxes over to the professionals, likely reflecting the tighter scrutiny by Canada Revenue on self-employeds.

The poll, which can be found on the home page, asks “Did you do your own corporate and personal taxes this year?” had 37 per cent responding “yes,” while a whopping 62 per cent replied that they handed their taxes over to someone else.

Finance Minister Jim Flaherty has told the CRA to collect more than $500 million extra from suspected tax cheats this year, with auditors applying a rare 50 per cent penalty for “gross negligence” even on those who have never owned a condo previously.

“Most mortgage brokers are commissioned sales people who receive a T4A, and then write off their business expenses against their earnings – they are therefore at high risk of being audited by CRA,” IMBA CEO Samantha Gale told MortgageBrokerNews, adding that “The CRA is a powerful government entity and the Income Tax Act is overwhelmingly complex. Industry members facing a CRA audit need an advocate to ensure that the audit result is fair and they do not overpay on taxes, penalties and interest.”

After a particularly difficult 2012 in the mortgage industry, brokers apparently have turned to those experienced in preparing tax returns to find every tax loophole and saving available – without fearing the CRA audit sword of Damocles hanging over the head.